Musk founded SpaceX in 2002 and as the New Republic and other outlets observed it “was created using technologies entirely subsidized by taxpayers.” And following the business models used in his other companies, SpaceX has donated tens of thousands of dollars to politicians at the federal, state and local levels and paid out massive fees to high-powered Washington lobbyists, while Musk’s company has received billions of dollars in government contracts and federal/state tax subsidies. Worse, SpaceX’s brief tenure in the space launch marketplace has been marked by a pattern of multiple missed deadlines, cost overruns, and product failures that have cost taxpayers tens of millions.

A LONG LITANY OF PERFORMANCE PROBLEMS….

SpaceX has been forced to cancel more than 50 percent of its planned launches since 2009 and had a backlog of more than 20 missions for 2015. Industry observers noted that even when SpaceX rockets did manage to bring payloads into orbit, there were often multiple anomalies, including “engines that failed to reignite or thrusters that didn’t ignite at all.”

Despite the company’s decidedly uneven track record, however, SpaceX asserted in 2014 that launches had become “routine,” leading one industry observer to note “the only thing SpaceX does routinely is scrub.”

Despite evidence to the contrary, Musk has repeatedly overstated the company’s capabilities, and been openly questioned by industry observers and experts. Industry observers credit SpaceX’s ability to survive despite more than 20 failed launches over the past five years and multiple product failures over the past 10 years to Musk’s partnership with NASA and SpaceX’s heavy dependent on government funding and subsidies;

Before the company landed its first NASA contract in 2009, Musk noted that there were many times “when we were not far from running out of money” and that “sometimes it’s disconcerting, watching how fast money goes out the door.” In 2012, industry analysts noted that “the current financial success of SpaceX is largely due to NASA contracts” and that “without NASA, they [SpaceX] would not be where they are today.” More than 80 percent of SpaceX’s capital investment has come from the US government; out of the $1.2 billion invested in the company, only $250 million came from commercial customers or private investors. NASA has also provided SpaceX with considerable flexibility, including allowing the company to combine two of three COTS test flight objectives into a single mission and awarding it operating space at the space shuttle launch complex at Kennedy Space Station.

In addition, NASA has yet to penalize SpaceX for its cost overruns, delayed missions, and failed launches, despite the fact that other companies have seen their contracts cancelled for similar missteps. In 2011, NASA suspended payments on a $70 million contract with Orbital after its Taurus XL rocket had two failed missions; it also canceled a $173 million contract with Rocketplane after the company failed to raise enough funding from the private sector.

Like Tesla, SpaceX likely could not survive without government money. In 2012, industry analysts noted that “the current financial success of SpaceX is largely due to NASA contracts” and that “without NASA, they [SpaceX] would not be where they are today.”

CAMPAIGN DONATIONS & CAREFUL CULTIVATION OF CHAMPIONS IN CONGRESS….

SpaceX’s most high profile failure was a Falcon 9 rocket explosion shortly after liftoff on June 28, 2015, which was to send critical supplies to the International Space Station. Over $100 million in taxpayer-funded equipment was lost in the explosion and deprived our astronauts of these supplies for almost six more months. Yet, instead of requesting an independent investigation into the explosion as numerous Members of Congress requested, SpaceX’s biggest champion in the Senate, John McCain, not only defended SpaceX’s performance but actually called for more government support for Musk’s company. Notably, Musk and his employees have not only been generous supporters of Senator McCain’s political campaigns, but Musk also cultivated this relationship through a SpaceX donation to the “McCain Institute” where Musk was also a featured speaker at its 2015 conference. McCain has also hosted Musk at meetings on Capitol Hill which he’s proudly touted on social media and even brought the President of Arizona State to Musk’s Palo Alto offices when they were trying to get him to invest in his state.

McCain has been joined in the pro-SpaceX effort by House Majority Leader Kevin McCarthy who has similarly received large campaign donations from Musk and his companies to both his campaign and leadership PAC. In fact, the Los Angeles Times reported in 2014 that their relationship had developed into a “bromance of sorts” while McCarthy has gone so far as to call Musk the “Wright Brothers of our generation.” Perhaps not coincidentally, among the very few pieces of legislation introduced by McCarthy in 2015, the two most significant would directly benefit Musk and SpaceX despite the fact that SpaceX headquarters are located hundreds of miles outside of McCarthy’s congressional district.

But as with his other companies, Musk has carefully cultivated personal relationships and made massive donations to members of both parties, including President Obama who received thousands from Musk while also touring a SpaceX factility in 2010 as Musk as developing his relationship with NASA.

ADDITIONAL BACKGROUND….

SPACEX HAS BENEFITED FROM GOVERNMENT SUBSIDIES

SpaceX “Was Created Using Technologies Entirely Subsidized By Taxpayers”

SpaceX “Has Been Awarded Billions In Government Rocket Launch Contracts, But Relatively Few Subsidies.” “SpaceX — which has been awarded billions of dollars in government rocket launch contracts, but relatively few subsidies — also competes against companies Musk says are subsidized.” (Jerry Hirsch, “Elon Musk: ‘If I Cared About Subsidies, I Would Have Entered The Oil And Gas Industry,’” Los Angeles Times, 6/2/15)

SpaceX Benefited From Over Half A Billion Dollars In Loans To Satellite Providers In Hong Kong; The Money “Subsidized The Purchase Of Satellites Made In The U.S. By Boeing And Loral And Launched By SpaceX Rockets.” “[E]x-Im approved more than half a billion dollars in loans in Fiscal 2013 to satellite providers in Hong Kong. This subsidized the purchase of satellites made in the U.S. by Boeing and Loral and launched by SpaceX rockets, which are also made in the U.S.” (Timothy P. Carney, “Elon Musk’s Rocket Company Gets Subsides From U.S. And France,” Washington Examiner, 4/29/14)

“Israel Separately Got A $105 Million Loan To Use SpaceX To Launch Its Israeli-Made Satellites Equipped With U.S.-Made Solar Arrays.” (Timothy P. Carney, “Elon Musk’s Rocket Company Gets Subsides From U.S. And France,” Washington Examiner, 4/29/14)

State Subsidies: Texas

SpaceX Received $20 Million In Economic Development Subsidies From Texas

According To The Los Angeles Times, SpaceX Has Received $20 Million In Subsidies From Texas. “Space Exploration Technologies: $20 million total … $20 million — Texas state and local incentives and rebates for space launch facility near Brownsville” (Jerry Hirsch, “How It Adds Up Three Companies, $4.9 Billion In Government Support,” Los Angeles Times, 5/30/15)

The Subsidies From Texas Were For The Construction Of A Rocket Launch Facility In Texas. “On a smaller scale, SpaceX, Musk’s rocket company, cut a deal for about $20 million in economic development subsidies from Texas to construct a launch facility there.” (Jerry Hirsch, “Elon Musk’s Growing Empire Is Fueled By $4.9 Billion In Government Subsidies,” Los Angeles Times, 5/30/15)

The Launch Facility Would Bring “500 Jobs To The Area Over A 10-Year Period.” “This week, the rocket and spacecraft company announced it will build a commercial launch facility outside of Brownsville, bringing 500 jobs to the area over a 10-year period. Brownsville, which has a population of approximately 200,000, is located near the Texas-Mexico border.” (Gabrielle Karol, “Will SpaceX Launch Brownsville, Texas’s Aerospace Industry?” Fox Business, 8/7/14)

Before The Deal Was Confirmed, Musk Told Texas Officials He Was Interested In Texas For The Site Of A SpaceX Commercial Rocket Launchpad, But Said Texas Would Need To Compete

Musk “Told Texas Officials He Was Interested In Building The World’s First Commercial Rocket Launchpad In Their State – If The State Would Compete.” “In a glass-walled conference room at the California headquarters of Space Exploration Technologies Corp., Chief Executive Officer Elon Musk told Texas officials he was interested in building the world’s first commercial rocket launchpad in their state — if the state could compete.” (Darrell Preston and Laura Tillman, “Billionaire Musk Gets Brownsville To Pay For SpaceX,” Bloomberg Business, 2/12/14)

“In The Months After The 2011 Meeting, State And Local Officials Gave Musk, A Billionaire, What He And His Lobbyists Sought: About $20 Million Of Financial Incentives, Laws Changed To Close A Public Beach During Launches And Legal Protection From Noise Complaints.” “In the months after the 2011 meeting, state and local officials gave Musk, a billionaire, what he and his lobbyists sought: about $20 million of financial incentives, laws changed to close a public beach during launches and legal protection from noise complaints. SpaceX, as the company is known, hasn’t said whether the Texas site, near Brownsville, the poorest metropolitan area in the nation, will be selected over locations in Florida, Georgia and Puerto Rico.” (Darrell Preston and Laura Tillman, “Billionaire Musk Gets Brownsville To Pay For SpaceX,” Bloomberg Business, 2/12/14)

Musk Appeared At A Hearing Before The Texas House Appropriations Committee Where He Said Texas Was The Leading Candidate But “We Are Absolutely Looking At Other Locations.” “Musk heeded the advice. On March 8, he appeared at a hearing before Pitts’s committee, which oversees spending, at the Capitol in Austin. Oliveira and a SpaceX lobbyist appeared with him. ‘Any support Texas can offer would be helpful,’ Musk said at the hearing. While Texas was the leading candidate, ‘We are absolutely looking at other locations.’” (Darrell Preston and Laura Tillman, “Billionaire Musk Gets Brownsville To Pay For SpaceX,” Bloomberg Business, 2/12/14)

SpaceX Increased Its Lobbying Activity And Musk Made Campaign Contributions To Texas Officials

“Three Years Of Discussions Among Texas Officials And SpaceX Representatives Culminated With The Incentive Offers, According To Interviews. SpaceX Hired Lobbyists And Flew A Key Lawmaker To Its Offices. Musk Gave About $12,000 In Campaign Contributions.” (Darrell Preston and Laura Tillman, “Billionaire Musk Gets Brownsville To Pay For SpaceX,” Bloomberg Business, 2/12/14)

SpaceX Increased Its Spending On Lobbying And “By The End Of 2012,” SpaceX Was Paying Five Lobbyists. “SpaceX increased spending for lobbying. The company had one lobbyist starting in November 2011. By the end of 2012, it was paying five between $95,000 and $200,000 in aggregate, according to state records, which require that the company report only a range of expenditures.” (Darrell Preston and Laura Tillman, “Billionaire Musk Gets Brownsville To Pay For SpaceX,” Bloomberg Business, 2/12/14)

SpaceX Lobbyists And Lawyers “Opened Discussions” With A State Representative From Brownsville, Laying Out “What The Company Wanted From State And Local Officials, Including Changes In The Law And Incentives.” “Company lobbyists and lawyers opened discussions with state Representative Rene Oliveira, a Brownsville Democrat. They laid out what the company wanted from state and local officials, including changes in the law and incentives, he said. SpaceX wanted the government to cover the cost of building electric and water lines to Boca Chica Beach, the proposed launch site, near where the Rio Grande empties into the Gulf of Mexico, said Oliveira.” (Darrell Preston and Laura Tillman, “Billionaire Musk Gets Brownsville To Pay For SpaceX,” Bloomberg Business, 2/12/14)

Musk “And A Trust In His Name” Made Contributions To The Chair Of The Texas House Appropriations Committee And To Two Brownsville Democrats. “In 2012, before the biennial legislative session, Musk and a trust in his name donated $1,000 to Representative Jim Pitts, a Republican who is chairman of the House Appropriations Committee, $1,000 to Oliveira and $3,000 to Senator Eddie Lucio Jr., a Brownsville Democrat.” (Darrell Preston and Laura Tillman, “Billionaire Musk Gets Brownsville To Pay For SpaceX,” Bloomberg Business, 2/12/14)

“By The End Of The 2013 Legislative Session In May, Lawmakers Approved Everything The Company Wanted, Including Changes To The Law And $15 Million For Infrastructure.” (Darrell Preston And Laura Tillman, “Billionaire Musk Gets Brownsville To Pay For SpaceX,” Bloomberg Business, 2/12/14)

According To A May 2015 Report, “Separate From Incentives, SpaceX Has Won More Than $5.5 Billion In Government Contracts From NASA And The U.S. Air Force.” (Jerry Hirsch, “Elon Musk’s Growing Empire Is Fueled By $4.9 Billion In Government Subsidies,” Los Angeles Times, 5/30/15)

In 2016 SpaceX Was Awarded An “Other Transaction Agreement” To Develop A Prototype For The U.S. Air Force

SpaceX Was Awarded A $33 Million “Other Transaction Agreement” To Develop A Prototype For The Air Force

The Air Force Awarded SpaceX $33,660,254 “For The Development Of The Raptor Rocket Propulsion System Prototype For The Evolved Expendable Launch Vehicle (EELV) Program.” “Space Exploration Technologies, Corp. (SpaceX), Hawthorne, California, has been awarded a $33,660,254 other transaction agreement for the development of the Raptor rocket propulsion system prototype for the Evolved Expendable Launch Vehicle (EELV) program.” (U.S. Department Of Defense, “Contracts,” Press Release, 1/13/16)

The Contract Requires Shared Cost Investment Between The Air Force And SpaceX. “This other transaction agreement requires shared cost investment with SpaceX for the development of a prototype of the Raptor engine for the upper stage of the Falcon 9 and Falcon Heavy launch vehicles. The locations of performance are NASA Stennis Space Center, Mississippi; Hawthorne, California; and Los Angeles Air Force Base, California. The work is expected to be completed no later than Dec. 31, 2018.” (U.S. Department Of Defense, “Contracts,” Press Release, 1/13/16)

SpaceX Was To Receive $33 Million From Air Force Fiscal Year 2015 Funds At The Time Of The Award, And SpaceX Was To Contribute $67 Million At The Time Of The Award. “The work is expected to be completed no later than Dec. 31, 2018. Air Force fiscal 2015 research, development, test and evaluation funds in the amount of $33,660,254 are being obligated at the time of award. SpaceX is contributing $67,320,506 at the time of award.” (U.S. Department Of Defense, “Contracts,” Press Release, 1/13/16)

“The Total Potential Government Investment, Including All Options, Is $61,392,710. The Total Potential Investment By SpaceX, Including All Options, Is $122,785,419.” (U.S. Department Of Defense, “Contracts,” Press Release, 1/13/16)

The Agreement Implemented A Section Of The National Defense Authorization Act That “Requires The Development Of A Next-Generation Rocket Propulsion System That Will Transition Away From The Use Of The Russian-Supplied RD-180 Engine.” “This agreement implements Section 1604 of the Fiscal Year 2015 National Defense Authorization Act, which requires the development of a next-generation rocket propulsion system that will transition away from the use of the Russian-supplied RD-180 engine to a domestic alternative for National Security Space launches.” (U.S. Department Of Defense, “Contracts,” Press Release, 1/13/16)

“SpaceX Offered The Only Made-In-The-USA Entry In A Three-Way Derby With Orbital And Sierra Nevada, Both Of Which Rely To Some Extent On Rockets With Russian Propulsion.” (Julie Johnsson and Dana Hall, “Musk’s SpaceX, Orbital ATK Split $14 Billion Pact With Newcomer,” Bloomberg Business, 1/14/16)

In 2015, Musk’s SpaceX Was The Only Certified Competitor For A Contract To Launch A Military GPS Satellite

“Elon Musk’s SpaceX Is About To Get Its First Contract To Launch A Military Satellite Into Space.” (Chris Isidore, “Elon Musk’s SpaceX Set To Get Its First Military Contract,” CNN Money, 11/19/15)

“The Air Force’s Next Generation Of GPS Satellite, Which Is Set To Launch In 2018, Was Put Out For Bid Six Weeks Ago.” (Chris Isidore, “Elon Musk’s SpaceX Set To Get Its First Military Contract,” CNN Money, 11/19/15)

SpaceX Was The “Only Certified Competitor For A Contract To Launch A GPS Satellite.” “That leaves SpaceX, founded by Tesla CEO Elon Musk, as the only certified competitor for a contract to launch a GPS satellite sometime next year.” (Clay Dillow, “SpaceX Poised To Win First U.S. Military Mission,” Fortune, 11/17/15)

SpaceX’s Main Competition, “A Joint-Venture Between Boeing … And Lockheed-Martin … Declined To Submit A Bid” Since “Its Reliance On Now-Banned Russian RD-180 Rocket Engines Has Made It Impossible … To Present A Compliant Bid To The U.S. Air Force, Which Conducts The Pentagon’s Space Launch Business.” “Last year, space cargo company SpaceX sued the U.S. government in federal court for the right to bid on military satellite launches. Now the company is poised to win its first contract for a military satellite launch after its main competitor —a joint-venture between Boeing ‘BA’ and Lockheed-Martin ‘LMT’ —declined to submit a bid. That rival, United Launch Alliance, or ULA, has enjoyed a monopoly on U.S. national security-related space launches since 2006, when Boeing and Lockheed teamed up on space launches. But its reliance on now-banned Russian RD-180 rocket engines has made it impossible for the company to present a compliant bid to the U.S. Air Force, which conducts the Pentagon’s space launch business.” (Clay Dillow, “SpaceX Poised To Win First U.S. Military Mission,” Fortune, 11/17/15)

SpaceX “Filed A Federal Lawsuit Challenging Rules That Blocked It From Earlier Bids,” And The Company Was “Granted Permission To Bid For Future Launches.” “Musk, who is also CEO of electric car maker Tesla Motors (TSLA), fought hard for the right to bid for the contract. SpaceX filed a federal lawsuit challenging rules that blocked it from earlier bids. The suit was settled out of court, and SpaceX granted permission to bid for future launches.” (Chris Isidore, “Elon Musk’s SpaceX Set To Get Its First Military Contract,” CNN Money, 11/19/15)

The Bid Is For An Undisclosed Amount. “Bids for the Pentagon’s next GPS satellite launch, worth an undisclosed amount of money, were due Monday.” (Clay Dillow, “SpaceX Poised To Win First U.S. Military Mission,” Fortune, 11/17/15)

2014 Contract With NASA To Transport U.S. Astronauts

In 2014, NASA Awarded SpaceX A $2.6 Billion Contract To Transport Astronauts To And From The International Space Station

In September 2014, NASA Awarded SpaceX A $2.6 Billion Contract To Transport U.S. Astronauts To And From The Space Station On Its Crew Dragon Spacecraft. “U.S. astronauts once again will travel to and from the International Space Station from the United States on American spacecraft under groundbreaking contracts NASA announced Tuesday. The agency unveiled its selection of Boeing and SpaceX to transport U.S. crews to and from the space station using their CST-100 and Crew Dragon spacecraft, respectively, with a goal of ending the nation’s sole reliance on Russia in 2017. … The companies selected to provide this transportation capability and the maximum potential value of their FAR-based firm fixed-price contracts are: Space Exploration Technologies Corp., Hawthorne, California, $2.6 billion.”(NASA, “NASA Chooses American Companies To Transport U.S. Astronauts To International Space Station,” Press Release, 9/16/14)

SpaceX And Boeing Were Chosen To “Build The Vehicles That Will Transport Its Astronauts To The International Space Station,” A Job NASA “Recently Relied Upon Russia To Perform: Carrying Out Manned Space Flights.” “NASA has chosen Boeing and SpaceX to build the vehicles that will transport its astronauts to the International Space Station, putting the two American companies on a course to take over a job that NASA has recently relied upon Russia to perform: carrying out manned space flights.” (Bill Chappel, “Boeing And SpaceX Win $6.8 Billion In NASA Contracts,” NPR, 9/16/14)

In November 2015, NASA Confirmed SpaceX Would “Launch Astronauts To The International Space Station By 2017.” “SpaceX hit a big milestone on Friday with NASA confirming on Friday that the Elon Musk-led space cargo business will launch astronauts to the International Space Station by 2017.” (Jonathan Vanian, “SpaceX Gets Huge Contract For Its First Manned Space Flight,” Fortune, 11/20/15)

2012 Contract For Space Launch Services For Space Missions

In 2012, SpaceX Shared A $900 Million Contract Under The U.S. Air Force Rocket Systems Launch Program

SpaceX, Along With Two Other Companies, Was Awarded A $900 Million Contract For The U.S. Air Force Rocket Systems Launch Program. “Lockheed Martin Corp., Bethesda, Md. (FA8818-13-D-0002); Oribital Sciences Corp., Dulles, Va. (FA8818-13-D-0004); and Space Exploration Technologies Inc., Hawthorne, Calif. (FA8818-13-D-0003), is being awarded a $900,000,000 indefinite-delivery/indefinite-quantity, firm-fixed-price contract for the U.S. Air Force Rocket Systems Launch Program.” (U.S. Department Of Defense, “Contracts,” Press Release, 12/3/12)

The Contract “Supports Space Launch Services For Space Missions For The Department Of Defense And Other Government Agencies.” “Contract supports space launch services for space missions for the Department of Defense and other government agencies. The location of the performance is Magna, Utah, Chandler, Ariz., and Hawthorne, Calif. Work is expected to be completed by Nov. 29, 2017. The contracting activity is SMC/SDK, Kirtland Air Forve Base, N.M.” (U.S. Department Of Defense, “Contracts,” Press Release, 12/3/12)

2008 Contract With NASA For Resupply Services For The International Space Station

In 2008, SpaceX Was Awarded A $1.6 Billion Contract With NASA For Commercial Cargo Resupply Services To The International Space Station

In December 2008, NASA Awarded SpaceX A $1.6 Billion Contract For 12 Flights Between 2009 And 2016 For Commercial Cargo Resupply At The International Space Station. “NASA has awarded two contracts — one to Orbital Sciences Corp. of Dulles, Va., and one to Space Exploration Technologies (SpaceX) of Hawthorne, Calif. — for commercial cargo resupply services to the International Space Station. At the time of award, NASA has ordered eight flights valued at about $1.9 billion from Orbital and 12 flights valued at about $1.6 billion from SpaceX. These fixed-price indefinite delivery, indefinite quantity contracts will begin Jan. 1, 2009, and are effective through Dec. 31, 2016. The contracts each call for the delivery of a minimum of 20 metric tons of upmass cargo to the space station. The contracts also call for delivery of non-standard services in support of the cargo resupply, including analysis and special tasks as the government determines are necessary.” (NASA, “NASA Awards Space Station Commercial Resupply Services Contracts,” Press Release, 12/23/08)

The Contract Was Had A Maximum Value Of $3.1 Billion.“NASA has set production milestones and reviews on the contracts to monitor progress toward providing services. The maximum potential value of each contract is about $3.1 billion. Based on known requirements, the value of both contracts combined is projected at $3.5 billion.” (NASA, “NASA Awards Space Station Commercial Resupply Services Contracts,” Press Release, 12/23/08)

The Center for Business and Responsible Government (CBRG) is a non-partisan organization dedicated to highlighting cronyism and its effect on American taxpayers and policy. We believe public officials should establish an even playing field for all businesses to compete in the marketplace, not just those special interests who line their pockets.